Earnings Preview: Viacom 3Q profit seen up a bit

LOS ANGELES (AP) — Fresh on the heels of a 10-day standoff with DirecTV that analysts say ended in its favor, Viacom Inc. reports its third-quarter earnings on Friday before the market opens. Analysts will be looking for an update from the company about how to reverse declining audience trends at its networks including Nickelodeon.

WHAT TO WATCH FOR: Many analysts have already given Viacom credit for a bare-knuckle negotiation with DirecTV that resulted in fees from the satellite TV company rising about 20 percent in the first year of a seven-year deal and climbing in the single-digit percentages each year afterward. The deal is worth more than $600 million annually.

Still, investors remain concerned about audience ratings weakness at the owner of MTV, Comedy Central, Nickelodeon, VH1 and BET and are hoping a turnaround plan begins to take shape.

Smaller audiences for shows compared to a year ago means that networks have to run commercials more often to reach the same audience promised to advertisers. That decreases the availability of 30-second spots for last-minute ad buys and can cut into revenue.

Citi analyst Jason Bazinet says he expects total ad revenue to decline 4 percent, with slightly more weakness coming from the U.S. market than internationally.

WHY IT MATTERS: New York-based Viacom tends to have its finger on the pulse of pop-culture trends and as such it is a cultural barometer as much as an economic one. Audience declines at children's network Nickelodeon have also raised the question of whether the availability of Nickelodeon shows on Netflix Inc.'s streaming platform has hurt viewership on traditional channels. Viacom sits at the heart of the debate about online video.

WHAT'S EXPECTED: Analysts polled by FactSet expect adjusted earnings of $1 per share on revenue of $3.49 billion.

LAST YEAR'S QUARTER: Viacom posted adjusted earnings of 99 cents per share on revenue of $3.77 billion.